November 26, 2025
1 mins read
When you first hear Assets Under Management (AUM), it might sound like complex finance talk you only hear in big meetings. But take a moment to break it down: AUM in mutual funds is the total market worth of everything a fund manages for its investors.
AUM reflects the overall size of a fund and often indicates investor confidence. If AUM is rising, it often means more investors are putting money in—maybe the fund is doing well, or the market is steady. Growing AUM is like a quiet cheer from the crowd.
Just so you know, before you invest, you must get a Demat account. It’s the easiest way to buy and store your mutual fund units—that’s your ticket into this area.
To get a clear picture of AUM, think of it as the total value of the fund’s entire vault. This includes all the stocks, bonds, and cash it holds. It’s the total wealth the fund is responsible for on behalf of people like you.
Here’s the key thing: a large AUM doesn't automatically make a fund "better." It just means it's bigger. It shows how much money investors have confidently handed over to the manager. A smaller AUM could just mean the fund is new or focuses tightly on one specific type of company.
You’ll see the AUM for mutual funds shifting constantly—even daily. It changes when security prices move, or when money flows in or out. Markets go up? AUM usually grows. Investors pull money out, or markets drop? AUM can fall. It’s always moving.
If you’re looking at funds on Bajaj Broking, checking the AUM gives you a good initial idea of the fund’s size and general stability before you invest.
This is because it represents far more than size. Here are many reasons AUM is relevant to you as an investor:
Cost Advantage: A larger fund (AUM) has daily operating costs that will, in many instances, be shared with many other investors, potentially generating a cost advantage for each investor.
Performance Correlation: A large AUM does not guarantee better results. What matters most is the experience and skill of the investment manager and their investment strategy applied to date.
Trust Indicator: A large AUM is usually an indicator that many investors have some level of confidence in the fund’s management and the fund’s ability to generate the expected returns for its investors.
Trading Ease (Liquidity): Greater AUM funds generally offer higher liquidity and smoother trading for investors, minimizing price fluctuations and reducing the impact of investor spreads.
Expense Ratios: An investment fund with larger AUM should result in better expense ratios, which benefit all the fund's shareholders by sharing the costs between more investors, which may result in lower costs incurred by the largest shareholders to manage the fund.
Market Impact: Large AUM funds can even affect the market when they make substantial stock purchases or sales.
It is easy to believe that a high AUM = superior performance. It is important to understand that size can be beneficial or detrimental, depending on the fund's investment asset strategy. Here are the implications:
More Overall Stability: Usually, a high AUM is a sign of many investors or diversification in the investor base.
Efficiency Gains: When costs are spread over more assets, the cost per unit tends to drop, often leading to lower expense ratios.
Less Room to Manoeuvre: For funds targeting small-cap or mid-cap companies, too high an AUM can be a problem. It is difficult for the manager to conduct trades in a timely manner without impacting the trading prices of securities.
Enhanced Oversight: Large funds are subject to more oversight from regulators and investors. Consequently, managers must be judicious and clear in their decisions.
This is something that investors often overlook: AUM does not refer to a fixed number. It relates directly to market performance and investor activity.
If the values of the fund's portfolios move up, then the AUM increases directly; conversely, if the values go down, then the AUM will decrease and correspondingly, if an investor redeems their units, the AUM will also go down.
So, tracking AUM means you’re tracking a live figure that changes daily based on the market and investor decisions.
Higher AUM means more stability, but it doesn't automatically mean you'll get better returns. The success of the fund truly depends on how smartly the fund manager allocates and runs those assets over the long term.
The AUM of a fund is the current total value of the fund. The calculation is straightforward, as it is just:
AUM = Total units × Market price per unit
For example, if a fund has 100,000 shares and is priced at ₹50, the AUM is ₹50,00,000.
But AUM is more than just that number. It represents a total of everything a fund holds - any investments, bank balances, and cash so you can assess the full scale of the fund. A Demat account obviously will make it simple for you to see your AUM and facilitate all transactions with your investments.
You’ve probably noticed some funds charge lower fees. This is often because of their AUM size. Generally, the bigger the AUM, the lower the Total Expense Ratio (TER) tends to be.
Why? Operating costs are shared among more investors. So, as the fund grows, the cost burden on each investor usually drops. That’s a direct perk of scale.
SEBI rules state that the TER should drop as a fund's AUM increases. Understanding AUM helps explain why one fund might have cheaper operating costs than another.
A larger AUM usually means the fund runs more smoothly—which is good for you. If you want to compare cost efficiency, AUM is a key metric to check when reviewing options, perhaps on Bajaj Broking.
Additional Read: What are the Oldest Mutual Funds in India?
A lot of new investors mix up AUM with NAV (Net Asset Value), but they are very different things.
AUM is the total market value of everything the fund holds—all stocks, bonds, and cash together. NAV, on the other hand, is the value for one single unit of that fund. Think of it like this: AUM represents the size of the entire fund, while NAV shows the value of one unit.
AUM changes constantly with market ups, downs, and investor trading. NAV is calculated daily based on total assets minus liabilities, divided by the number of outstanding units.
Simply put: AUM shows you the fund’s overall scale and popularity, while NAV tells you the exact worth of each unit you own.
When examining a mutual fund, its AUM is much more than just a number; it represents trust, growth, and scale. A high AUM can mean stability as well as good access (liquidity); it simply doesn't mean better investment returns. What is most important is how the fund manager will invest the money over time.
If you'd like to invest in funds with stable trading or lower management fees, checking their AUM is a great first step. When you’re ready to invest, you can easily open a Demat account with Bajaj Broking to manage everything.
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The Assets Under Management (AUM) in mutual funds refers to the total market value of all assets managed by the fund. It indicates the fund's size and reflects the net capital invested by all investors. A higher AUM often suggests higher investor confidence and scale of operations.
AUM in mutual funds represents the total assets managed by a fund. It includes investments in stocks, bonds, and other securities. AUM fluctuates with market performance, inflows, and outflows. Fund managers utilise AUM to make informed investment decisions, aiming to maximise returns for investors .
Investing in mutual funds offers benefits like diversification, professional management, and potential returns. Funds pool money from multiple investors, allowing access to various asset classes. The AUM in mutual funds provides insight into the fund’s credibility, indicating investor trust and potential growth.
Index funds replicate the Nifty 50 by investing in its constituent stocks in the same proportion. As AUM in mutual funds grows, more funds are allocated to these stocks. This helps maintain the fund’s objective to mirror the index’s performance, providing investors with returns similar to the Nifty 50.
AUM in mutual funds directly impacts the Net Asset Value (NAV). As the value of assets rises or falls, AUM changes, thereby affecting the NAV. Larger inflows also increase AUM, which, when invested efficiently, could stabilise or boost NAV, benefiting investors in the long term.
Increasing mutual fund AUM involves gaining investor trust, consistent performance, and effective marketing. Fund managers aim to outperform benchmarks and market conditions to attract inflows. As AUM in mutual funds rises, it enhances economies of scale, allowing for more efficient fund management.
Mutual fund costs include management fees, operating expenses, and administrative charges, which are generally linked to AUM. Higher AUM in mutual funds may lead to lower expense ratios due to economies of scale, making the fund cost-effective for investors while covering the operational costs.
AUM is calculated by multiplying the total number of outstanding mutual fund units by the current Net Asset Value (NAV) per unit. It also includes the value of cash, securities, and dividends earned. AUM changes daily based on market performance, fresh investments, and redemptions made by investors in the fund.
AUM indicates the size, popularity, and investor confidence in a mutual fund. Larger AUM often suggests fund stability and consistent past performance. However, it shouldn't be the only deciding factor. Investors use AUM as a starting point to gauge fund reputation, but they also consider returns, expense ratios, and investment objectives.
Investment companies use AUM as a measure of success, performance, and credibility. It helps them attract new investors, negotiate better rates for services, and showcase the fund’s popularity. AUM also affects revenue, as many fund houses charge fees based on a percentage of total assets managed under the fund.
AUM includes the total market value of all assets a fund manages, such as stocks, bonds, cash reserves, liquid assets, and accrued earnings like dividends or interest. It reflects both the capital invested by clients and appreciation from market performance, minus any redemptions or losses in asset value.
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